Recently, the shares of a private bank suddenly fell sharply due to an audit error. A few months ago, a cooperative bank was in trouble and faced the control of the Reserve Bank.
What is the safest way to deposit money?
Many banks have been in trouble in the past. They have attracted attention. In this context, let’s look at the basic features of insurance related to bank deposits.
Insurance protection: Generally, deposit investment is considered to be low-risk and safe. However, when a particular bank goes bankrupt, it is natural to worry about what will happen to the deposit protection. Insurance provides protection in such times.
Deposit protection: The Deposit Insurance and Credit Guarantee Corporation, a subsidiary of the Reserve Bank, provides protection to deposit funds up to Rs 5 lakh. This comes in handy in cases like bank bankruptcy, closure or cancellation of license. This is applicable to all banks.
Limit of Protection: The insurance cover for deposits is applicable up to a maximum of Rs 5 lakh. It should be noted that this covers all the amount in the bank account. Savings, recurring deposits, etc. will also be taken into account.
Expansion: The expansion advocated in financial planning
applies to this as well. Since there is a limit to the deposit insurance, it is better to have deposits in more than one bank than to keep money in a single bank. The limit of Rs 5 lakh should be kept in mind and acted accordingly.
Increase in amount: There is a demand to increase the amount of insurance cover. The cover, which was already Rs 1 lakh, was increased to Rs 5 lakh in 2020. Currently, there is an expectation that this amount should be increased to Rs 10 lakh.
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